Apple learned from Sony's mistakes in the past, when Sony refused to cannibalise their own recording business and produce the goddamn mp3 player that everybody was asking for. Apple released Sony's goddamn mp3 player, killed Sony's Walkman business, and then they released the phone that finally killed the mp3 player (before everyone else did). It's about seeing where technology is heading, and produce the right stuff even if it's in competition with your own products.

Now Microsoft is cannibalising their gamer market by producing a gaming console that's slightly inferior to the competition, at a slightly higher price, to get in b4 Apple's iTV kills the TV. It's good thinking: the market has been crying out for something that simplifies TV and consolidates cable and internet video and PVR (and who knows, maybe even video telephony) and whatnot into one easy to use device. Microsoft's one serious mistake, however, was to attach it to a hideously expensive gaming console with features that no one wants (always-on DRM and leeching money off the used games market).

So yeah, Microsoft correctly sees where technology is heading (I assume), they just don't realise that gamers are easily pissed off and non-gamers won't buy the most expensive gaming console.